Posts Tagged Property Management Rates
MANAGING PROPERTY FOR OTHERS – DELIVERING STATEMENTS AND PAYMENTS TO OWNERS
Posted by patandkrislarkin in Property Management on February 20, 2012
Delivery of Statements – Mail Hard Copy vs. e-mail
When our company started all of these processes and procedures . . . it seems bizzare to say it but . . . there was no internet or e-mail. All of the monthly statements along with all of the backup copies of invoices were packaged, posted and mailed out to each of our Owners. With the advent of e-mail and good quality scanners, we were able to move toward e-mailing our monthly statements to our Owners. The only thing that held us back was our Owners; many of whom were a bit technologically challenged and “didn’t do e-mail”.
As we moved forward though, we pushed to make the change. I am a big believer in processes and the more processes you have for the same outcome, the less efficient you are. I know that the time is quickly approaching when this will no longer be an issue and electronic delivery will be the standard for all property owners.
If you are just starting a property management firm, this is an awesome opportunity for you. You can start from the beginning sending your statements out electronically . . . and not be faced with converting to the new technology that will undoubtedly be here all too soon!
Payments to Owners
Assuming that our Owners’ property had a positive cash flow, we paid a disbursement out to each of our Owners at the time we issued the statements. Our software had a default setting that basically told it to send the Owner any remaining cash in the account after all expenses have been paid. This is not always a good thing; if you have a system like this, you want to be diligent to keep an eye on future anticipated expenses. Let me tell you it is not fun to have sent an Owner a bundle of money one month, then the next month you are trying to pay his real estate taxes and you don’t have enough money in the account. You then have the opportunity to ask the Owner to send the money back to you. This is not good for your credibility! We could also go into our system and set a cash minimum that we wanted to maintain in all of our accounts and it would automatically send the Owner anything in excess of that amount. It is all a matter of how you want to set it up.
Like mailing out hard copies of statements and technology marching on, making payments to our Owners has also undergone some changes. In the early days, we sent out live checks each month to our Owners. Now, with the advent of ACH or; Automated Clearing House, we can electronically transfer funds from our trust account to our Owners’ bank accounts, minimizing live checks, mail problems, etc. Again, we still had those Owners (probably the same ones that “don’t do e-mail”) “who don’t do electronic deposits”. We continued to work with them knowing that “someday . . . this too shall pass!”
Our hope and prayer is that this information has been helpful and sparked some thought processes for you. To discover more resources for managing rental properties for yourself or others, visit our website and check out our Books, Documents, Forms, Checklists, Videos . . . available in hard or immediately downloadable versions.
Thank you for reading!
Pat and Kris Larkin
MANAGING RENTAL PROPERTIES – Owners and What Type of Properties to Manage
Posted by patandkrislarkin in Property Management on January 24, 2012
While you will have your ways of doing business and many regulations that you cannot stray from, to be successful managing properties for others, you will need to know how to adapt and work with their personalities. That is not to say that you be totally co-dependent on your Owners, but learn how they like to do business and make your best efforts to conform your practices to their idiosyncrasies.
Our philosophy is that the Owner has hired us so that they don’t have to deal with the day-to day-issues of managing properties. We try to spare them the gory details of the everyday stuff, but then involve them in the bigger decisions. At what level your Owner wants to be involved in the details, you will have to just learn and figure that out. We suggest when you are having your initial conversations with your Owners that you ask them some qualifying questions on this subject before you enter into a management agreement.
Qualifying questions for potential Owners
1) While we will always attempt to contact you whenever we have to spend money for service, we normally will respond to a service request under $100.00 without having to speak directly to you. We may leave a voice mail or an e-mail to let you know what is going on. Does that work OK for you?
2) Do you have e-mail? Are you willing for us to use e-mail as our primary method of communication?
Their response will give you a better idea as to whether or not you should do business together. If they aren’t going to be happy with you, you certainly are not going to be happy with them!
Types of Owners
The Involved Owner: Some Owners are very detail oriented and want to be involved in many aspects of the management of their property. Others want to be involved to a fault and may attempt to micro-manage or second-guess your actions. You may find yourself asking the question “Why does this person want a property manager?” There are a couple of issues at play here;
1.) Some people are simply very involved until you have proven that you are trustworthy and they are convinced that you indeed have their best interests at heart.
2.) Others are simply control freaks and no matter what you do, will be in your business all the time. With this second type of Owner, you will have to do some soul searching as to whether or not this is a positive situation for you. If it works OK, then great. If not, then there may be another property manager out there who it works fine for. That may be the best solution for both of you; to end the relationship sooner rather than later.
The Uninvolved Owner: On the other end of the spectrum, we have Owners who don’t want to hear about their property. They just want a monthly statement and a deposit in their bank account. The less they hear from you the better. While this type of Owner has a lot of positive attributes, this is the Owner that you also want to be very proactive with. You don’t want to pester them with details . . . remember, they hired you so they wouldn’t have to deal with all that stuff. However, be proactive with your communication with them, and this is true for all of your Owners. Document your actions in writing either by sending them an e-mail or by leaving them a voice mail and documenting it in a communication log. How technologically savvy they are will determine which method of communication you use. The uninvolved Owner can be a bit disarming at times. Don’t think their seeming lack of involvement means a lack of interest. The truth is they are very interested in the outcome of your management of their property. Continue to keep good records and keep them informed, even if they appear uninterested.
Be Dialed In to the Type of Properties you are Willing to Manage:
While this is a personal decision, we want to share some pros and cons we have observed in this area. We are not making a character judgment about any of the groups listed below. These are simply our observations as a result of our experiences in working with all of the groups.
White Collar Properties:
Also defined as high-end properties, these can attract very good renters. These renters have typically owned expensive homes and as a rule will take very good care of your property. On the other hand, our experience is that the high-end renter can have a very entitled mentality and can be difficult to work with. Things like requesting and scheduling maintenance, seemingly pretty simple things can become very challenging with these tenants. Another aspect of the high-end tenant is that if you don’t meet their expectations, they do have the resources to come after you legally. White collar renters will typically have more financial resources and are executives or self employed. You will find them to be fairly well insulated from an economic downturn.
Gray Collar Properties:
These are properties in the middle of the economic spectrum rented by the gray collar worker. What is a gray collar worker? I’m glad you asked! It is typically a middle management person; the manager of the local electronics, or grocery store. This renter is generally conscientious and will take care of your property. They are typically regular people and most all adults in the home are working full time. They are generally easier to work with than the white-collar renter when it comes to requesting or scheduling maintenance work. They possess moderate financial resources and will be somewhat insulated from an economic downturn.
Blue Collar Properties:
This renter is at the lower end of the economic spectrum. They usually work in the trades, i.e., construction worker, car mechanic or truck driver. Generally, all adults living in the property work full time. They are also just regular people and are generally easier to work with than the white-collar renter when it comes to requesting or scheduling maintenance work. They possess more limited financial resources and will be the first tier to be affected from an economic downturn.
Don’t Let Fear Deter You: If at anytime during your due-diligence/interviews with an owner you get that gut feeling that this guy just ain’t going to work out . . . heed the warning! This could be anything from not having a good connection with your communication or that he wants you to manage a type of property that you are not set up for. We are all different and there is nothing to be ashamed of in that. There are people that I am just too different from and will have difficulty doing business with in a way that will make them happy. Conversely, there are people out there that are just different enough from me that they would have a tough time keeping me happy either. Embrace your differences and rather than being fearful that you will lose face or be embarrassed, nip it in the bud! Do both of you a favor and save a lot of heartache and hard feelings; decline to do business with them. Perhaps you could refer them to another property management firm.
So, how do you do that? I learned a great technique from my pastor, of all people. I simply tell the prospective owner that based on our conversations, it is apparent to me that we may not be a great fit for one another. There are a lot of great property management companies out there and I am sure that one of them would be a better fit for their needs than I can be. I wish you the best of luck. And . . . don’t let them talk you into it . . . you know what your gut just told you! HEED THE WARNING!!
Thank you for reading!!
Pat and Kris Larkin
For more information and resources for profitably managing your rental property visit our Website
RESUMES AND MARKETING YOURSELF IN TRANSITION
Posted by patandkrislarkin in Property Management on January 19, 2012
Let’s assume that your construct confirmed your suspicion that you would be well suited for a career in property management, what are the next steps. How do you put together a resume which will convince the people hiring that you are a good bet in property management even though you may not have as much experience in the field as some of the other applicants for the same position?
Resumes and marketing yourself is a vast subject and to do yourself justice you will really want to take advantage of some of the information that is out there which will take you to a much higher level of detail than we will here.
We do, though, have a lot of experience in the hiring side of things . . . both from the perspective of the employer as well as the employee.
In today’s wide-open Internet world, the possibilities for you to market yourself to countless numbers of people are nearly endless. It is really just marketing. Experts tell us that you only have seven seconds to make your first impression and that is why a great format for communicating to the decision makers is so important . . . scratch that . . . it’s imperative.
In my travels I have finally come across a resume format that literally turns heads. I’ve even had interviewers at the end of an interview say to me, “This resume looks great, it really got my attention. Where did you get it?” So in the spirit of sharing my stuff, I am sharing it with you.
Resume:
First you start with what I call the “Billboard” section of the resume. Remember the 7 seconds to make a great first impression? That’s what the billboard is all about. Please refer to our sample resume in the appendix at the end of this chapter to see what I am talking about.
Billboard – This at the top of your resume and it is going to give a quick snapshot of who this great applicant is (you). It will contain the title of the general position you are seeking and then a short (perhaps two lines) summary of who you are and how wonderful you are. Next part is just words in bold type that describe your skills and talents. Below this section is a section describing even more incredible skills and talents you have. I say that a bit tongue in cheek, but it is true, you need to be selling yourself and this is the place to do it.
Selected Career Highlights – This is where you list the previous positions you have held at various companies. Be careful here. Remember, you are not going to write this, as you would have when you were looking for another job in your old industry. You are changing industries so you need to find similarities between your previous positions and the one you are seeking. If you were a purchasing manager for a medical supply company and you want to be a property manager, you will want to find the things like: Balanced multiple projects simultaneously or Relate quickly and easily with all diversities, personalities and business levels. Tell what you did, such as: Contracted with major pharmaceutical companies balancing multiple priorities continually.
Don’t misunderstand me, I don’t want to put words in your mouth and I don’t want you to be dishonest. Tell the truth or you won’t be able to own it. Be sure and tell the part of the truth that won’t distract them and will show them the part of you that they want.
Be sure to limit your information per company to four or five bullet points in your first listing and less for the subsequent listing. This is of course unless one of your subsequent listing has the most in common with the position you are seeking.
You will want to continue to list previous positions to show at least the last five years of employment and, ideally, your entire career. You will need to balance this with length of your resume. Perfect world length is one page; I think 2 is OK, but I recommend that you not go over that.
Other Relevant Experience, I use this section in my resume for a position I held many years before the last job listing on my resume because it showed particular relevance to the position I was seeking but, did not fall into comfortable chronological order with the others.
Education – Just list the schools attended and degrees earned. If you didn’t finish college, as I did not, just list the schools you attended. I don’t call attention to the fact that I didn’t get my degree. The people looking at this are smart and will ask you about it if it is important to them. If it is a non-starter for them, then it is.
Professional – List your licenses, any and all Trade Associations you belong to, or special training seminars you have attended, and computer skills along with particular software you are proficient with.
Personal – You don’t want to make this too long or too personal. Just list your marital status – any children and what you like to do on your time off. Sitting on the sofa sucking down beers while watching the game probably wouldn’t be a good idea!
References – I subscribe to the idea that in your first exposure to folks, your mission is to make that great first impression. It is not to overwhelm them with paper work. I don’t include references with my resume but I do tell them that I will provide excellent ones if they would like. Again, if this is an important issue for them, they will ask.
Hopefully, this has been helpful to you. For more information and resources about transitioning your career to Property Management go to our website.
See you next time!!
Property Managment Fees – Know What to Expect
Posted by patandkrislarkin in Property Management on March 4, 2011
Managing rental properties is not for everyone. When you make the decision to hire a property management company to manage yours, the information can be overwhelming and confusing. This article will help to “untangle” the sometimes convoluted fee structures property managers use.
When you bought your rental property, more than likely, you did your homework to try and figure out whether or not it was the right deal for you. Similarly, when we bought our property management company, we did a lot of due diligence also and learned that there are two basic types of property management fee structures out there: 1.) Low Base Fee and 2.) The All-Inclusive Fee. Which one you choose has a lot to do with what services you may need.
The Low Base Fee is just as the name implies . . . it is a low fee for minimal services. This fee structure provides for collecting rents, screening Tenants, writing leases and paying you, the owner, any funds left over at the end of the month. The range of rates charged for this type of a property manager is between 4% and 6% of the monthly rent. For a property Renting for $2,000 per month, assuming a rate of 5%, the fee adds up to $1,200 annually ($2,000 per month X 12 months X .05).
The thing to watch out for with Low Base fee structure is the “Lease Up Fee” or “Leasing Commission” as many refer to it. Most Low Base Fee property managers do NOT include this cost in their fees and they can double your property management fees right off! If you figure a 5% leasing commission (which is common), that is another $1,200 per year just for the lease up fee! Another thing to watch out for is that some of the Low Base Fee property managers may also charge a fee for any payments they make on your behalf; mortgage, property taxes, HOA dues, so do your homework!
The all-inclusive fee structure on the other hand, pretty much includes all of these fees in it’s single fee. Now, don’t misunderstand me, at 8% to 12%, the all-inclusive fee structure usually will be higher than the low-base fees structure at first glance. But when you add up all of the extras and compare them most times the all inclusive fee structure will work out to be less money.
One other thing to consider when assessing property management companies and their fee structures: the all-inclusive property manager typically pays the lease commission out of their pocket… up front. So, they have a vested interest in finding you a good renter who will stay in your property for more than a year.
On the other hand, the property manager who charges extra for a lease-up fee or leasing commission each time they rent your property, has a vested interest in the other direction… to have you pay them the commission every year. This could translate into more of a cavalier attitude about finding you a long-term renter.
In summary: If you will be performing some of the property manager functions like leasing your own property, paying your mortgage, insurance and property taxes then, the low-base fee structure may be best for you. Conversely, if you don’t plan on having anything to do with managing your property, for instance if you will be living out of the area for a while; the all inclusive fee structure may be better suited for your needs.
If you found this article interesting, you can view a short video at: http://bit.ly/eWcFid
After selling their property management business in 2009, Pat and his wife founded and developed “Manage To Make Money” which is a resource for property managers providing Books, Documents and Forms, Live Seminars, E-Books, Free Webinars, Tips and Private Consulting. The website is: http://www.ManageToMakeMoney.com
PatandKrisLarkin.com 